JAKARTA — Indonesia’s annual economic growth held just above 5 percent in the second quarter, roughly in line with expectations, official data showed on Monday, but it prompted authorities to pledge new measures to boost activity in the second half of 2024.
Gross domestic product in the April-June quarter expanded 5.05 percent from a year earlier, compared with 5.11 percent in the first quarter, data from Statistics Indonesia showed.
Economists polled by Reuters, as well as government officials, had expected Southeast Asia’s largest economy to post 5.0 percent annual growth for the April-June period.
Falling commodity prices and high interest rates have weighed on Indonesia’s growth this year, though authorities hoped spending for elections would provide a buffer.
The government will introduce policies to support growth for the rest of 2024, Finance Minister Sri Mulyani Indrawati told a media conference after the data release, without providing details.
“In the third and fourth quarter, we will continue to monitor factors to maintain economic growth at 5.1 percent to 5.2 percent,” Sri Mulyani said. “Of course, this is not easy when the global economy tends to weaken and to be fragmented.” Government spending softened in the second quarter, offsetting the rise in investment and exports.
Household consumption, which makes up over half of GDP, held steady with an expansion of 4.93 percent, helped by higher spending during religious holidays and rising income amid harvest season.
However, this was the slowest second-quarter expansion of household spending since the April-June quarter of 2020, the deputy head of Statistics Indonesia, M. Edy Mahmud, said, adding that spending on clothes and travel was not as strong as before.
Government spending only expanded 1.42 percent year on year in the second quarter, slowing sharply from growth of almost 20 percent in the first quarter that reflected spending for the February general election.
Investment grew 4.43 percent in the second quarter, compared with under 4 percent in the first quarter. Net exports, which measure exports against imports, contributed to growth in the second quarter, compared to a contraction in the previous three months.
Radhika Rao, an economist with DBS Bank, said growth will likely stay at 5 percent for all of 2024, with a slight moderation expected in the second half of the year as the lift from the election and religious festivities fade.
Maybank Indonesia economist Myrdal Gunarto said Indonesia’s economic prospects will improve next year, predicting domestic interest rates will come down along with global rates.
“Next year there will also be many populist programs by the new government… which can supplement domestic consumption,” he said.
Incoming president Prabowo Subianto, who will take over from Joko Widodo in October, has pledged to boost growth to 8 percent, partly by creating jobs through a program to provide free school meals.
Indonesia’s economic growth in 2023 was 5.05 percent.
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